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Transfer of land to Gwadar port:Shipping, Defence ministries, PN yet to resolve dispute

KARACHI: While it is more than a year since the deadline of June 2008 for transfer of around 584 acres land to Gwadar Port Authority (GPA) has passed, the government has not yet been able to convince the Ministry of Defence and Pakistan Navy (PN) to vacate the said land at East Bay, where as per Concession Agreement the concessionaire, Port of Singapore Authority (PSA), would establish industrial and port-related facilities.

Further, the Ministry of Ports and Shipping sees the survival of Rs 17 billion Gwadar Port project at stake, as the Ministry of Defence and PN do not seem to be serious in transferring to GPA what the two call it strategically important “defence land”.

The establishment of a Free Zone, as per Gwadar Master Plan, is the lifeline of the Gwadar Port. Under the international Concession Agreement signed between Islamabad and PSA in February 2007 the former was to ensure transfer of 2,281 acres land to the concessionaire by 2nd of June 2008 on lease basis. Of this, 584 acres portion is occupied by PN.

Because of a longstanding dispute between the Ministry of Ports and Shipping and PN, backed by Ministry of Defence, development work at the proposed Free Zone is far from start-up. If the situation persists, the PSA fears that it would ultimately compel it to knock the doors of Arbitration Court, in London, in pursuance of the agreement.

The Ports Ministry claims that the Naval authorities and their supporters in Defence Division have persistently been changing their viewpoint about use of the disputed land. “It is submitted that the Defence Division has been changing its viewpoint on the said land… similarly, Pakistan Navy has been changing its stance on the land in question,” said a letter sent by the Ministry of Ports and Shipping to the Prime Minister.

Terming the rapidly changing arguments of Defence Division and PN in support of their contention to deny transfer of the said land as “not tenable”, the Ports Ministry apprehends that the Rs 17 billion Gwadar Port would become a “liability” if not expanded/developed as per its Master Plan to make it commercially viable.

According to the ministry’s letter, the Defence Division, referring to Defence Land (Acquisition, Custody and Relinquishment) Rules 1944, according to which the land was not transferable free of cost to an autonomous body like GPA, first linked its long-awaited transfer to GPA with a nod from the Premier.

But, the latter took a new stance stating that out of 584 acres only 30 acres of land could be made available to GPA for building road-rail link leading to the Free Zone, and the remaining land was essentially required by Navy from “technical strategically and geographical point of view”, it added.

Backed by Prime Minister’s Secretariat, the recommendations of Defence Division have now been challenged by the Ministry of Ports and Shipping, which has requested the Premier to review his support for the Division’s argument, which it deems as untenable.

“(The) Prime Minister is requested to kindly review his earlier decision… on the summary of ports and shipping and issue necessary directions to the ministry of defence to transfer 584 acres of land to GPA, free of cost, so that the port can survive as a commercially viable entity,” the ministry said in the letter.

The ministry claims that the Defence Division is now acting contrary to the directives it had issued to PN in February 2007 after order of the then President (Musharraf) and Prime Minister (Shaukat Aziz). The ministry of ports and shipping is also critical of PN, which, it claims, had been changing its statements since January last year.

“In January/February 2008, Pakistan Navy conceded this land to Defence Production Division for the construction of Shipyard… In February 2008 (it) demanded Rs 7008 million for the said land at Rs 12 million per acre for leasing it to GPA,” said the letter.

“In March 2008 it was willing to hand over the land to the ministry of ports and shipping on gratis basis subject to approval of the Prime Minister,” it added. The disputed land is important in a sense that it would be used for the development of a waste back up area for storage of the imported and exportable cargo, a container terminal, the industrial estate that would boost the much-required economic activity and so on.

“The development of Free Zone is critical to the main objective of the port ie transhipment by attracting more and bigger vessels,” argues the letter adding that the “Government of Pakistan has signed an international agreement wherein it is committed this land to the Concessionaire. This land was to be handed over by June 2, 2008. As such we have already defaulted”.